What Are the True Costs of Rehabbing a House?

What Are the True Costs of Rehabbing a House?

If you’re a real estate investor, you already know that rehabbing a house costs money. However, if you’re new to the business, you may not know just how much money it takes. It’s important that you account for all of your expenses when you undertake your first rehab project.

So what are all of the expenses associated with a rehab project?

Expenses Associated With Rehabbing a Home

Flipping houses can be a very lucrative field, so it’s no wonder that business savvy investors want to dive in quickly. However, expenses can pile up quickly, too. Some of the expenses associated with rehabbing a home include:

Real estate commissions. Remember that the seller often pays Realtor® commissions – and that will apply to you when you turn around and sell the property. That can take a significant portion of your profit on the transaction.

Interest and loan fees. When you get a hard money loan in Atlanta, it’s typically because conventional financing won’t work for your type of transaction. However, like conventional financing, you’ll need to pay interest and loan fees, which can be considered an expense associated with rehabbing a home.

The cost of title insurance will come out of your overall profit, the debut of hazard insurance, that will, too.

You’ll also need sufficient funds to pay contractors (unless you plan on doing most of the work yourself, which can be a mistake).

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House flippers focusing on flipping luxury homes are a part of a rising market. While non-luxury houses aren't flipping as well, this market, if you can afford it is still doing well. Consider that the National Association of Realtors showed that sales of existing homes declined over ten percent in the last year. Starter homes,